Activist Funds Feel It, Too

Buyout shops aren't alone in witnessing the end of a golden age. Activist hedge funds also are finding life trickier now that cheap credit has evaporated, and with it some of the tools they used to gin up their investments.

The use of borrowed money enabled investors like Carl Icahn and Pirate Capital to magnify their investments -- and their clout with boards. As lenders now demand more collateral from hedge funds to back loans,...